Social value, housing associations and the Procurement Bill

27 May 2022

The Procurement Bill in the Queen’s Speech hammers home the need for housing associations and public bodies to take into account social value when procuring work, but a lack of consistency in measuring it may prove challenging, argues Steve Cooper.

Article originally published in Housing Today on 23rd May 2022. View the original article ➔

According to the Queen’s Speech, public procurement is being reformed to make procurement “more simple, transparent and accessible to better meet the country’s needs” and enable small businesses and voluntary, charitable and social enterprises to compete for public contracts.

As the Government repeatedly says, this reform is a result of Brexit.

The Green Paper, Transforming Public Procurement, suggests that “meeting the country’s needs” is seen in terms of “public benefit” and, in turn, “social value.”

The 2012 Public Service (Social Value) Act is a fairly rare example of a private member’s bill becoming law. Chris White’s bill was all about culture and behavioural change. It has been around for 10 years but has only recently started gaining momentum. White himself has described it as “a tanker we have taken a decade to turn.” Policy is now becoming more prescriptive.

Procurement Policy Note 06/20 published in September 2020 requires central government departments to use social value to assess and score suppliers, explicitly accounting for social value, rather than just considering it.

The new bill arguably takes a belt-and-braces approach to delivering public benefit with multiple mechanisms: removing the requirement that the chosen tender must be economically the most advantageous; requiring the contracting authority to have regard to … maximising public benefit; and requiring procurement processes to follow a National Procurement Policy Statement.

The simple change from Most Economically Advantageous Tender (MEAT) to Most Advantageous Tender (MAT) allows contracting authorities to take a broader view of what can be included in the evaluation of tenders, with more focus on quality than price.

The Government has said that this change will support levelling up by encouraging contracting authorities to give more consideration to social value when procuring public contracts in their areas.

A National Procurement Policy Statement was published in June 2021 and the Procurement Bill requires buyers to have regard to the strategic priorities it sets out.

The statement requires buyers to consider the following social value outcomes alongside any additional local priorities: supporting local communities and SMEs, creating new jobs and new skills in the UK; improving supplier diversity, innovation and resilience; tackling climate change and reducing waste. There is clearly overlap with the twelve levelling up missions.

When acting on its own behalf, Ridge seeks to deliver social value by making a significant contribution to jobs, apprenticeships, services, support, investment and the environment in local communities. We are increasingly formalising how we measure and report on social value.

Ridge uses the Social Value Portal, tailoring our own themes, outcomes and measures from the national TOMs, devised by the National Social Value Taskforce. It is one of the more precise and detailed toolkits we’ve come across, but the fact that there’s such a choice is a challenge. The existence of the TOMs is intended to provide a level of consistency in measurement of social value although it is no guarantee that your partners and, more importantly, your clients and potential clients will evaluate social value the same way you do.

We have seen some housing associations taking a commercial mindset when it comes to social value. It will be interesting to see how housing providers start to diverge in the way they procure, depending on whether they are covered by the new regime, and how far the private sector is influenced to build social value into its activities.

Social value comes in many forms and, with increasing budgetary pressures, buyers need to be open and transparent about what they are asking. Suppliers can then be clear on what needs to be specifically priced as opposed to be deemed included through organisational social value.

Annex A of PPN 06/20 requires that a minimum weighting of 10% of the total score must be given for social value. That requirement is tempered by the lack of a consistent measurement toolkit.

Part of the difficulty in achieving uniformity is that there isn’t a common way of measuring social value. How can clients compare like for like offerings from their supply chain? It fits the levelling up agenda that each local authority is able to set its own vision of inclusive growth and a local social value agenda using its local knowledge but doesn’t achieve a uniform and predictable procurement system.

Steve Cooper is a partner with responsibility for social value at property and construction consultancy Ridge.